Argentina markets buckle up for reopening after Milei election triumph

<html xmlns=""><head><title>Argentina markets buckle up for reopening after Milei election triumph</title></head><body>

By Marc Jones

LONDON, Nov 21 (Reuters) -Investors were buckling up on Tuesday as Argentina's local markets prepared to reopen after the weekend's Presidential election win of radical libertarian outsider Javier Milei.

Argentina's markets had been closed on Monday following Sunday's vote, but there were major moves in assets traded internationally, including the quasi shares of main energy giant YPF YPFD.BA, which saw a 40% surge after Milei said he would look to privatize it.

With Milei promising to deliver economic shock therapy to the long-troubled economy, international bonds had risen too but Tuesday's action was set to be dominated by how fast and furiously the official peso rate drops.

The currency's overvaluation is seen as being at the heart of the country's economic strife. There is a gaping chasm between the official government rate and where it trades on the streets.

Morgan Stanley's analysts said on Monday they expected it to drop 80% over the next six weeks. Milei said in the runup to the election he wanted to ditch the peso altogether in favour of the dollar and shut down the central bank, too.

"The big question is obviously what happens to the currency now given Milei's comments before the elections," said Viktor Szabo, an emerging market portfolio manager at Abrdn in London

"The black market is far away from the official rates so some adjustment needs to happen. The issue is how quickly that happens."

One of the few ways both locals and internationals have been able to trade the peso over the last 48 hours has been in cryptocurrency markets which trade 24 hours a day, albeit in tiny volumes compared to traditional FX.

One tether - a cryptocurrency pegged to the U.S. dollar - was trading at 981.4 pesos, up 3.2% on the day, according to the crypto exchange Binance's website, although it was well off a high of 1120.4 seen on Sunday.

Bitcoin was up, too, at 36,856 peso per bitcoin, compared to 27,880 a month ago.

U.S.-listed shares, known as "depository receipts" of Argentine banks had also rallied. Banks Grupo Supervielle, Banco Macro, Banco BBVA Argentina and Grupo Financiero Galicia had closed up between 17-24% on Monday, while the $50.8 million Global X MSCI Argentina ETF ARGT.K added 11.6% to close at $46.98, its highest since early September.

Milei, who will take office on Dec. 10, did not refer to "dollarization" in his first speech, raising questions about how quickly he might pursue scrapping the peso entirely.

He has pledged wholesale economic change for the battered economy, where inflation is at 143% and set to spiral as the peso devalues. FX reserves are depleted and currently more than $10 billion in the red.

Milei had also heavily criticised China and Brazil in the runup to the elections, two of Argentina's main trading partners. China said on Tuesday it would be a "serious mistake" if Milei opted to cut ties between the two countries.

Reporting by Marc Jones
Editing by Bernadette Baum


Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.